How this is calculated
The payment is fixed by the amortisation formula and never changes. Each month, interest = current balance × monthly rate. Principal = payment − interest. The new balance is the old balance minus that principal, and the process repeats until the balance reaches zero.
Worked example on $200,000 at 6% over 30 years: the monthly payment is about $1,199. In month one, interest is 200,000 × 0.005 = $1,000, so only $199 goes to principal. In month 360, interest is about $6 and principal about $1,193.
The crossover — the month where principal first exceeds interest — comes far later than most people expect. On this loan it is around year 18 of 30. Until then, more than half of every payment is rent on the money.
What the schedule tells you that the payment does not
After five years on that $200,000 loan you will have paid roughly $72,000 and reduced the balance to about $186,000. Around $58,000 of what you paid was interest. This is the number that matters when deciding whether to move, refinance, or sell in the near term.
It also explains why refinancing resets a clock. Taking a fresh 30-year loan ten years into an existing one returns you to the interest-heavy part of the curve, so a lower rate can still mean more total interest. Compare total remaining interest, not the monthly payment, when evaluating a refinance.
Where extra payments do the most work
An extra payment applied to principal removes that amount from the balance permanently, so it saves every future month's interest on it. Early in the loan that is decades of avoided interest; late in the loan it is a few months.
On the $200,000 example, one extra $1,199 payment in year one saves around $3,900 of interest over the life of the loan and shortens it by about a month. The same payment in year 25 saves under $200. If you intend to overpay, front-load it.
How to use the amortization calculator
- Enter the loan amount, rate and term. The same three inputs as any loan calculation. The schedule is derived from them.
- Read the yearly breakdown. Each row shows interest paid, principal repaid and the remaining balance for that year.
- Find your own horizon. If you expect to sell or refinance in five years, read that row. The remaining balance there is what you will owe, and the interest paid to date is what the period actually cost you.